Finance with John Elder
LE#5  Capital Budgeting: NPV and IR


RWJ Chapter 9, #7, 8, 12ab, 17abcd.   These are all IRR and NPV questions.

You can practice these on a spreadsheet or financial calculator or non-financial calculator.  If you don't have a financial calculator or spreadsheet, finding the IRR requires making educated guesses.  The IRR is analogous to the YTM on a bond, so the same rules apply.   (Excel has functions =NPV and =IRR, if the "analysis toolpack" is loaded.  For examples of their use, see the examples on the lecture notes, or the Excel help screens.)  


7. IRR is 22.06%. 

17. NPVs are $16,549 and 5,567 (try the other parts on your own).